Technical Analysis Update On The IBD50 Index

As part of our ongoing partnership with Investor’s Business Daily we have added all of the IBD50 components to our equity research coverage. We are updating our Chartbook on a weekly basis and members of Allstarcharts have access to that workbook here.

Today, I wanted to discuss what we’re seeing from this group to identify the overall trend for U.S. stocks and also to find trading ideas to profit from that directional move.

This index is made up of stocks showing both relative strength and positive momentum, in addition to other factors that play a role in adding or removing components from the list of 50. What attracts me to this group, however, is the relative strength and positive momentum, just to be clear.

This is the Innovator IBD50 ETF $FFTY which to me, is still in an uptrend. We want to continue to err on the bullish side of this ETF and the group as a whole:

I still think we can get up towards 41, which represents close to 15% of upside from current levels. I would expect the other U.S. Indexes to do well in that environment. That makes sense when comparing the data to what we’re seeing in other averages like the Russell3000.

One of the stocks that stands out is Viper Energy, breaking out this week above its 2014 highs. The way I see it, prices have been consolidating for 4 years. If we’re above 35.50, we want to be long $VNOM with a target just under 50:

If we’re not above 35, then there is no reason to believe we should be going higher. That scenario adds both price risk and opportunity cost. We only want to be long this thing if it’s above those 2014 highs.

There are a lot stocks in this group that are both breaking out to new highs and also presenting us with a risk vs reward proposition that is skewed in our favor.

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